Joanne Lees, 32, took the stand on the opening day of the trial of Bradley John Murdoch, a long-distance lorry driver from Western Australia, for the murder of Mr Falconio, 28. He is alleged to have tied her up after shooting her boyfriend dead. Ms Lees escaped and hid in the bush for five hours before flagging down a truck driver.
Ms Lees, dressed in a white blouse and black skirt, took the stand late in the day to describe how she and Mr Falconio found themselves on the lonely Stuart Highway at, or near, Barrow Creek, north of Alice Springs, on 14 July 2001.
After detailing her relationship with Mr Falconio, she went on to reveal that she had an affair with another man while the couple were living in Sydney.
She told the court she had a relationship with a man called Nick Riley, admitting that she had "overstepped the boundary of friendship". She said of Mr Riley: "He was a friend, a good friend, and we became close, and we were intimate at one time. We were friends and we overstepped the boundary of friendship. But that ended and later we became friends again. "
She said the episode had not had any effect on her relationship with Mr Falconio, who had not known of the affair.
Ms Lees appeared relaxed as she told how she had enjoyed a romantic moment with Mr Falconio as they shared a cannabis joint and watched the sun set just hours before the attack.
She told the packed courtroom: "I was very happy. It was a beautiful sunset."
Ms Lees, from Huddersfield, who moved to Brighton in 1997 to live with Mr Falconio, even smiled and laughed as she recalled that she had chosen to play music by Texas, despite it not being Mr Falconio's favourite, as it was the "driver's privilege".
She said they were forced to travel quite slowly on Australia's outback roads because their 30-year-old kombi van could not exceed 55mph without shaking uncomfortably. There were also problems with its exhaust, and a few days earlier the steering column had to be repaired. But she said the van was her boyfriend's "pride and joy" and they slept in it every night on their travels. Mr Falconio had even added a safety deposit box to suit their needs.
Earlier, opening the case against Mr Murdoch, Rex Wild QC, the director of public prosecutions, told the court that about an hour after they had watched the sunset the couple stopped their van when another driver indicated there was a problem with its exhaust. Mr Falconio got out of the van to check and Ms Lees heard a loud bang.
"It was the last time Joanne Lees saw Peter Falconio alive, nor has anyone else seen him alive from that moment," Mr Wild said.
Seconds later, the driver of the other vehicle appeared at the side window of the camper van and pointed a revolver at her. He pushed her to the other side of the van and tied her hands behind her back. She was then shoved into the back of the vehicle.
Mr Wild said Ms Lees was "determined to survive", alone with her hands tied behind her back, a sack over her head and loose tape around her feet in the back of the vehicle, covered by a canopy. He said she could see light seeping in from the bottom end of the canopy, and slid down the vehicle on her back before dropping over the edge.
"Her feet touched the ground and she was off," Mr Wild told the Northern Territory Supreme Court in Darwin. "Running as fast as she could." He said she ran straight into the bush until she was about 100ft from the side of the road and about 200ft from where the attack took place. She buried herself behind trees and scrub curled up "like a rabbit".
Mr Wild said it was dark and she could see nothing, but heard a vehicle being driven north and then, a short time later, someone come back. Then she heard the noise of something, possibly Mr Falconio's body, being pulled or hauled along the gravel.
At about 8pm, she could not hear anything and was able to bring her bound hands under her bottom and feet, Mr Wild said.
The court was told she waited for five hours until a road-train truck came along and she jumped out in front of it. She left it so late the driver, Vince Millar, thought he had hit her as he braked.
Mr Wild said no one had seen Mr Falconio since that night, and his body had not been recovered. The court was told that Ms Lees feared the attacker would rape her.
Mr Falconio and Ms Lees had arrived in Australia on 16 January 2001, as part of a round-the-world trip.
Mr Falconio's father Luciano, of Hepworth, near Huddersfield, told the court they were a close family who kept in touch regularly.
Breaking down in tears, Mr Falconio said his son and Ms Lees had been working in Sydney to supplement their income before carrying on with their travels.
He said he last spoke to his son two days before the attack. As he wiped away tears, he said: "If he was alive, he would have definitely rung to let us know."
Mr Wild also told the court that DNA evidence on three items - Ms Lees's T-shirt, the gearstick in the camper van and the tape around the cuffs - linked Mr Murdoch to the murder.
He added that footage from a CCTV camera, which was played to the court, showed a man who looked like Mr Murdoch at a truck stop in Alice Springs at 12.38am on 15 July, the day after the attack.
Mr Wild said: "It's the Crown's case that Joanne Lees was attacked, Peter Falconio murdered, by Mr Bradley Murdoch ."
Mr Murdoch denies murder and has pleaded not guilty to charges of depriving Ms Lees of her liberty and of assaulting her in aggravated circumstances. The trial continues.